K00524
PENSION SCHEMES ACT 1993, PART X
DETERMINATION BY THE PENSIONS OMBUDSMAN
Complainant / : / Mr B WalshScheme / : / C.B.I Members’ Pension Scheme
Trustee / : / Sedgwick Trustees Limited
Employer / : / Clements & Street Limited
Administrator / : / Axa Sun Life Services Limited
(formerly Equity & Law Life Assurance Society plc) (Sun Life)
THE COMPLAINT (dated 15 May 2000)
Mr Walsh alleged injustice involving financial loss in consequence of maladministration by Clements & Street Limited and Sun Life in that he had not received a pension which was due for payment on 3 January 2000.
MATERIAL FACTS
Mr Walsh was a member of the Scheme, a defined benefits arrangement insured with Sun Life, until 5 April 1991.
In a letter to Clements & Street Limited dated 28 June 1991, Pearl Assurance plc sought the completion of a questionnaire for the possible transfer of Mr Walsh’s benefits in the Scheme to a personal pension plan or section 32 buy-out policy. Clements & Street Limited forwarded a copy of this letter and the questionnaire to Sun Life for completion and return.
On 28 November 1991, Sun Life issued a ‘Statement of Leaver’s Benefits’ and a ‘Transfer Value Out Quotation’ for Mr Walsh. The latter stated that:
“The benefits given up are as detailed on the attached Statement of Leavers Benefits. If the transfer goes ahead the trustees should obtain a disclaimer from the member stating these benefits have been given up.”
On 3 February 1992 Mr Walsh completed an application form to purchase a personal pension policy with Pearl Assurance plc.
In a letter to Sun Life dated 12 March 1992, Pearl Assurance plc stated that, for the transfer to proceed, a cheque was required for the transfer amount made payable to Pearl Assurance plc.
On 25 March 1992, Sun Life sent a cheque for £4,619.73 and a completed questionnaire to Clements & Street Limited which were stated to be for Mr Walsh and onward transmission to Pearl Assurance plc.
On 8 July 1992, Sun Life received a telephone call from Clements & Street Limited to the effect that a cheque of £4,619.73 had been received but the covering letter had been lost. Sun Life informed Clements & Street Limited that the cheque had been for Mr Walsh and faxed a copy of its letter dated 25 March 1992.
Mr Walsh has since stated that he decided against completing the transfer to the Pearl Assurance plc and he had assumed that the pension benefits had remained in the Scheme.
On 18 September 1999, Mr Walsh wrote to Sun Life enquiring about his pension benefits which were due for payment on his normal retirement date of 3 January 2000.
Subsequent enquiries established that:
· Sun Life’s records for the Scheme showed that the transfer value of £4,619.73 had been paid by a cheque made payable to Clements & Street Limited.
· The cheque had been cashed on 14 April 1992.
· Sun Life’s procedure for the Scheme until October 1994 had been for all cheques to be made payable to, and sent to, Clements & Street Limited.
· Pearl Assurance plc had no trace of a payment received and had no policy number for Mr Walsh.
· There was no evidence that a discharge form had been completed by Sedgwick Trustees Limited.
Investigation has revealed that Clements & Street Limited entered into receivership on 1 August 1994 and, on 12 August 1994, the assets of Clements & Street Limited were purchased by Orrmac (345) Limited. On 14 October 1994 Orrmac (345) Limited incorporated a name change to Clements & Street Limited. The investigation has therefore established that the former Clements & Street Limited no longer exists and that the present Clements & Street Limited is not the successor employer of MrWalsh.
CONCLUSIONS
Mr Walsh decided not to complete the transfer of the value of his benefits from the Scheme to Pearl Assurance plc. It is apparent therefore that the former Clements & Street Limited failed to notify Sun Life of Mr Walsh’s change of mind and it also failed to return the unwanted payment. This failure would not have occurred had Sun Life made the transfer value cheque payable to Pearl Assurance plc, as was originally requested. The unwanted cheque would then have had to have been returned to Sun Life and Mr Walsh would have been safely reinstated into the Scheme. Nor could any of this have occurred had Sun Life properly obtained authority from Sedgwick Trustees Limited instead of drawing the cheque without informing them, and consequently without any authority. The failure properly to safeguard and to preserve Mr Walsh’s benefits from the Scheme constituted maladministration and, accordingly, I uphold the complaint against Sun Life.
Undoubtedly, Mr Walsh has suffered distress and disappointment in not having his benefits paid when due.
DIRECTIONS
I direct that Sun Life shall, forthwith, reinstate Mr Walsh’s benefit entitlements in the Scheme, and
(i) within 7 days of the date of this Determination, inform Mr Walsh of the benefits and options which should have been made available to him as at his normal retirement date of 3 January 2000; and
(ii) within 7 days of the receipt of Mr Walsh’s instructions, pay to him the arrears of his benefits together with simple interest, calculated at the base rate for the time being quoted by the reference banks, from the due date of any lump sum benefit, and from the monthly due dates of any arrears of instalments of pension, to the dates of actual payment; and
(iii) reimburse the Scheme accordingly.
In addition to 15(ii) above, Sun Life shall also pay to Mr Walsh the sum of £250 as appropriately modest redress for the non-pecuniary injustice caused by its maladministration identified in paragraph 14 above.
DR JULIAN FARRAND
Pensions Ombudsman
30 March 2001
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